DIVORCE DOES NOT HAVE TO DESTROY MICHIGAN SMALL BUSINESS

A divorce can be stressful enough when a party’s financial livelihood is not at stake. However, for small business owners in Michigan who are going through a divorce, the financial ramifications of the divorce can be disastrous if the proper protective measures are not taken. Based on this fear, there are several recommended steps for individuals to take to ensure that they and their business are secure when the splitting of assets occurs.

It has been reported that the profitability of a business can significantly diminish during the course of a divorce. In many cases, this is attributable to the business owner’s fear that more profits will mean a higher payout to their soon-to-be-ex spouse. Also, there are often times a business appraisal will need to be conducted to allow the parties to see exactly how much the business is worth at the time of the divorce. Due to the differing interests, this appraisal is frequently completed by two individuals, each representing one side of the divorce, a process that can get very expensive.

In order to best protect the business assets and profitability, it has been suggested that the parties construct a prenuptial agreement regarding the business prior to marriage. This could reduce the risk of litigation, a benefit that will save both parties a substantial amount of money. It has also been suggested that if the business is owned by more than one individual, that an agreement be reached between the partners prior to its formation. This agreement will ensure that there is a process in place for a member going through the divorce to liquidate their share to satisfy a property division order.

Maintaining a business during a Michigan divorce can be stressful if not properly planned for. By seeking the right advice and by using the many legal remedies that could limit exposure, business owners can ensure that they will be able to continue to earn a living despite other uncertainties. This reassurance can go a long way to regaining prosperity and stability once the divorce is finalized and the parties move on.

Source: Fox Business, “How to Minimize the Impact of Divorce on Your Small Business,” Jennifer A. Brandt, Aug. 2, 2012